Lloyd's Market Association Bulletin

LMA16-049-SM  |  07 December 2016

Modern Slavery Act – Transparency in Supply Chains

What is the Act?
The Modern Slavery Act 2015 is designed to tackle slavery in all its forms and consolidates previous offences relating to trafficking and slavery. The Transparency in Supply Chains (TISC) provision of the Act specifically targets organisations above a certain size in order to encourage them to use their 'purchasing power' to exert influence on their supply chains and discourage others from being involved in slavery.

To which organisations does the TISC requirement apply?
The TISC provision applies to all organisations supplying goods or services with a turnover of £36 million or more, carrying on a business, or part of a business in the UK (not just those registered in the UK).

What do organisations need to do?
All organisations subject to the TISC provision are required to produce a slavery and human trafficking statement for each financial year. The statement must include the steps the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place in any of its supply chains, or in any part of its own business.

An organisation can choose not to take any steps. However, such organisations must still produce and publish a statement reflecting that approach and there is an expectation of progress over time, i.e. organisations will need to build on what they are doing year-on-year.

It could be argued that Lloyd’s managing agents do not have supply chains in a traditional sense, and that the supply chains they might have are not complex (unlike large retail or manufacturing organisations). However, all Lloyd’s managing agents are required to produce and publish a statement, although such statements are likely to be relatively short and simple, compared to organisations in some other industries.

It is worth reiterating that the required statement relates to steps an organisation has taken/is taking (or that it has taken no such steps). It is not an attestation that its supply chains are slavery free.

Who needs to approve the statement?
The statement must be approved by the Board and signed by a director.

When do firms need to publish a statement?
The statement must be published within six months of the end of the financial year and cover the previous year. For managing agents, the first statement will cover the period 1 January 2016 to 31 December 2016, and should be published by 30 June 2017.

How should it be published?
Organisations are required to publish the statement on their website and must include a link to the statement in a prominent place on their website’s homepage.

Outsourced Shared Market Services
Both the LMA and its Xchanging Review Board (XRB) committee have discussed the requirements of the Act with both Lloyd’s and CSC/Xchanging. CSC has published its group statement and has confirmed that all CSC corporate entities, including Xchanging Ins-sure Services (XIS)/Xchanging Claims Services (XCS) and intra-group ‘sub-outsourcers’, are covered by the statement. CSC’s statement is supported by a number of policies and there is an undertaking to carry out audits from 2017. The LMA’s XRB committee (acting on behalf of all managing agents for XIS/XCS’ outsourced shared services) will expect to see the assessments from these audits.

The LMA’s market committees will also ensure that other market service providers within the scope of this Act are aware of the requirements and taking action to comply.

Lloyd’s has also published its own statement which managing agents might find useful.

Further information
The government has published a useful guide to the requirements and how organisations can approach the production of their statements. Further guidance and a useful set of tools has been published by the Walk Free Foundation.

Steve Morrell
Manager, Legal and Compliance